Fish out of water: Industry profit flounders as the cost of inputs rises
London, United Kingdom (PRWEB) June 11, 2013
The Seafood Processing industry comprises operators that fillet, can, preserve, salt, freeze and transform seafood into products that are purchased by supermarkets and specialist retailers, and sold to the food-service and catering sectors. According to IBISWorld industry analyst Patrick Ross, “the industry has struggled over the five years through 2013-14 after coming under increasing pressure from high input prices, volatile catch volumes and the sustained economic recession”. Industry revenue is expected to grow at a compound annual rate of just 0.1% over the five years through 2013-14, bringing revenue to £2.7 billion.
Seafood catch volumes in the United Kingdom have decreased significantly, pushing up prices and meaning seafood processors are undersupplied. As purchases of seafood are the highest single cost for the industry, this effect has squeezed profit margins to breaking point because processors are forced to keep their selling prices low to compete with cheaper, more plentiful imported produce. The industry is becoming increasingly dominated by the large-scale supply contracts issued by supermarkets, which have encouraged processors to consolidate their operations to cut costs and become more competitive. This difficult operating environment has been aggravated by the economic situation, which has discouraged consumer spending. Fresh seafood sales have fallen because seafood is a luxury item for many people. IBISWorld estimates that industry revenue will contract by 2.0% in 2013-14 as many operators restructure and consolidate.
These problems, overfishing regulations and import competition are set to plague domestic processed seafood supplies over the next five years. Meagre growth is forecast for the industry over the five years through 2018-19. The minor growth achieved will stem from increased demand for seafood due to greater health consciousness. However, the industry will struggle to overcome the effect of diminishing wild fish stocks and a higher level of imports. Ross adds, “the development of fish farms will help close the gap between supply and demand for seafood in the long term, but this will do little to alleviate shortages and high seafood prices in the short term”.
The level of market share concentration in the Seafood Processing industry is considered low, as the top two players in the industry account for only 28.1% of total industry revenue. While the industry remains fragmented for now, the present trend is towards consolidation, and market share concentration is increasing year on year. The influence of supermarkets is such that far larger supply contracts are up for grabs. This has encouraged firms to unite production in order to pursue economies of scale and scope. Major companies include Young’s Seafood and Icelandic Group UK.
For more information on the Seafood Processing industry, including latest industry trends, statistics, analysis and market share information, purchase the full report from IBISWorld, the nation’s largest publisher of industry research.
IBISWorld industry Report Key Topics
Industry operators process fish, molluscs, crustaceans and other seafood. This industry also includes establishments known as floating factory ships that process seafood on board ship. The industry excludes processing and preserving fish on fishing vessels, whale processing or producing oils and fats from marine material. Preparing frozen fish dishes and manufacturing fish soups also fall outside the scope of this industry.
Key External Drivers
Industry Life Cycle
Products & Markets
Products & Services
Globalisation & Trade
Market Share Concentration
Key Success Factors
Cost Structure Benchmarks
Barriers to Entry
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